The Inland Revenue will this week announce its final proposals for a cap on the size of executive pensions amid signs that schemes are already springing up to help companies get round the regulations.

Pensions experts are divided on whether the Government will increase the cap, initially set at £1.4 million, when the details are announced with the pre-Budget statement on Wednesday.

The Confederation of British Industry, which has led a campaign against the proposed cap, says it is 'hopeful' of a change in the limit but others believe it will remain at £1.4m, enough to buy a pension worth around £60,000 a year.

KPMG and other benefit consultants are understood to be marketing schemes designed to get round the cap.

The scheme from KPMG involves paying employees a portfolio of shares, rather than cash, with a restriction to prevent them selling the shares for a specified period.

The restriction means the employers get a discount on their tax rate, which can be as high as 50 per cent, if it lasts a decade or more. Another scheme involves the employer giving a loan to a company set up by the employee.

The loan is converted into a small number of preference shares with a minimal value. The company is then sold and the employee pays just 1 per cent tax.

KPMG would not discuss individual schemes but said that advisers were looking for ways to 'plug the gap' in pension provision. Mike Pomery of consultants Hewitt Bacon & Woodrow said: 'Inevitably, as soon as there is a high tax rate, people try to find ways round it.'

Under the proposals, any excess above £1.4m will attract a 33 per cent 'recovery charge' and there would be 40 per cent income tax on the pension paid with the remainder of the tax, prompting opponents to complain that that amounts to a 60 per cent tax.

The Government claims the limit will affect only 5,000 people and said a pension pot that was already above that level would be protected.

Most company directors' pensions are significantly above that. But Andrew Sweeny of Mercer HR Consultants estimates that it could catch 600,000 people over 15 years.